Case Study: South Korean FDI in the State of Georgia, Intro

Introduction

Although most people understand that U.S. trade with Northeast Asia is quite large and significant, it is only tangible for many of us when you begin to break that trade down to a more local level. By using the term tangible, I am referring to the goods and services we buy, the companies or organizations with which we are employed, and the people with whom we interact on a regular basis.

From my own experience working for Denso Corporation's flagship, North American manufacturing facility (DMMI) in Battle Creek, Michigan, I know first hand the impact of foreign direct investment (FDI) in the United States by foreign firms, and the resulting follow-up strengthening of trade between a foreign country and the United States. In fact, the Denso story was documented and published in a book, titled 'Small Town, Big Corporation', that is an excellent case-study for anyone involved in attracting foreign direct investment to their community. (Unfortunately, the book is no longer in print but was authored by Jim Hettinger and Stan Tooley, former V.P. of DMMI).

Because of my closeness with the Japanese community in Battle Creek, I became familiar with efforts by the State of Michigan to attract FDI from Japan and to work with organizations like the Japan External Trade Organization (JETRO), and the field always interested me. Although I haven't lived in Michigan since 2004, my work with Manhattan Associates has led me to the possibility that someday I might work at their headquarters in Atlanta, Georgia. I have also worked for a 3PL in Japan that distributes products for Coca-Cola, also based in Atlanta, and I have a good friend at UPS now working in their headquarters in Atlanta. As a result, I began to do some research on Georgia to learn more about the State's trade with Northeast Asia. I was quite pleasantly surprised.

My goal is to provide study material for those interested in better understanding the positive impacts of FDI on local, U.S. communities and also touch on what makes communities successful in attracting FDI. I believe the effort to educate others on the positive impacts of FDI is extremely important at a time when trade with other countries, including countries friendly to the United States, is more and more perceived as a negative for the U.S. economy.

Because explaining the complexities of the globalization dynamic cannot easily be communicated in 30 second sound bites, "zero-sum" arguments tend to overwhelm conversations on trade. A common theme involves automatically equating facility and resource investments by U.S. companies overseas with 1-to-1 facility closings and/or job losses domestically. This argument is attractive to those most impacted by facility closings and/or job losses in the U.S. because it is so simply made and tangible for the affected worker. It is true that some facility closings are directly a result of moving production or services to another country, but as of 2004 this reason accounted for approximately only 1% of job loss across the United States. Once the domestic job creation of FDI is factored in, as well as the fact that global markets are not static in terms of size, products, and opportunities for innovation, job losses induced by trade, specifically imports of products once sourced domestically, become even more negligible.

In the end, it is up to local and state communities to develop policies that reduce the impact of trade-induced job loss, but it is important that communities also actively highlight and emphasize the development and success of FDI in raising overall living standards.

Comments

Good piece!

A sane voice in times of crisis.

"It is true that some facility closings are directly a result of moving production or services to another country, but as of 2004 this reason accounted for approximately only 1% of job loss across the United States."

I linked this post to help illustrate the connectivity of our shared world economies as we tackle this latest economic storm.

In the end, it is up to regional and condition areas to create guidelines that decrease the effect of trade-induced job reduction, but it is important that areas also definitely emphasize and emphasize the growth and achievements of FDI in increasing overall residing requirements.